Shoppers Reject discounter stock

DISCOUNT retailer The Reject Shop says it has failed to get its product range right amid a decline in consumer spending.

The Reject Shop’s net profit dropped 28 per cent to $12.3 million in the year to July 2, as the company had forecast in April.

Weak trading conditions, particularly in Western Australia and the ACT, contributed to a fall in like-for-like sales of 1.6 per cent.

Chief executive Ross Sudano said sales were particularly challenging in the second half of the year, largely due to declines in consumer spending and a poorly received merchandise strategy.

He said the group had over invested in new products at the expense of everyday value and branded bargains.

“The impact was a perceived loss in value by some of our customers and reduced foot traffic,” Mr Sudano said. “This occurred at a time when the availability of discretionary income is challenged and consumer confidence amongst our core customers continued to deteriorate.”

Mr Sudano said The Reject Shop was returning to basics, with a focus on everyday items at good prices. However, the tough trading conditions experienced in the second half of 2016/17 have continued into the current financial year.

The company’s comparable sales in the first seven weeks of 2017/18 were down three per cent on that period a year ago.